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en:elasticity-of-production [2019/02/06 07:51] federico [Elasticity of Production] |
en:elasticity-of-production [2019/02/06 07:52] (current) federico [Elasticity of Production] |
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**ΔQ/Q / ΔL/L** = 10/100 / 2/10 = 0.1 / 0.2 = 0.5 | **ΔQ/Q / ΔL/L** = 10/100 / 2/10 = 0.1 / 0.2 = 0.5 | ||
- | If the production function contains only one input, the elasticity of production measures the degree of [[https://www.econowiki.com/doku.php?id=en:returns-to-scale|returns to scale]]. In this case: - if the elasticity of production is 1, the production has constant return to scale, at that point. - if the elasticity of production is greater than one, the production has increasing returns to scale at that point. - if the elasticity of production is less than one, the production has decreasing returns to scale at that point. | + | If the production function contains only one input, the elasticity of production measures the degree of [[https://www.econowiki.com/doku.php?id=en:returns-to-scale|returns to scale]]. In this case: |
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+ | - if the elasticity of production is 1, the production has **constant returns to scale**, at that point. | ||
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+ | - if the elasticity of production is greater than one, the production has **increasing returns to scale** at that point. | ||
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+ | - if the elasticity of production is less than one, the production has **decreasing returns to scale** at that point. | ||